May narrowly heads off defeat after caving in to Brexit hardliners

Theresa May has narrowly seen off a Commons rebellion from Conservative remainers unhappy that she had caved in to hardline Brexiters by accepting their amendments to the customs bill.

The government majority was reduced to just three votes on the two most controversial amendments after leading Tory remainer Anna Soubry complained that the prime minister had lost control of events by making concessions to the rightwing European Research Group of MPs.

The most important of the four amendments from the ERG, chaired by Jacob Rees-Mogg, had been designed to frustrate May’s compromise proposals over customs arrangements agreed at Chequers and had initially been opposed by the government, until Downing Street made a sudden U-turn in the afternoon.

No 10 then concluded that all four amendments were “consistent with the Brexit white paper”, a decision that so incensed Tory remainers they vowed to vote against the amendments in Monday night’s Commons debate.

One junior minister, Guto Bebb, resigned rather than support the ERG customs union amendment, which narrowly passed by 305 to 302. A total of 14 Tory remainers voted against the government, while three Labour MPs and former Labour MP Kelvin Hopkins voted the other way. A second ERG amendment, preventing the UK joining in with the EU’s VAT regime post-Brexit, passed 303 to 300.

A frustrated Soubry had told the Commons: “The only reason that the government has accepted these amendments is because it is frightened of somewhere in the region of 40 members of parliament – the hard, no-deal Brexiteers, who should have been seen off a long time ago and should be seen off.”

She asked: “Who is in charge...is it the prime minister or is it the member for North East Somerset [Jacob Rees-Mogg]”? Her remainer colleague Dominic Grieve said of the amendments: “The only intention behind their tabling was malevolent.”

May’s decision improves her prospects of making it through to the summer break without a leadership challenge. On Monday night, it emerged that No 10 had proposed bringing forward the summer recess to Thursday, to reduce the time available for Conservative MPs to hold a confidence vote if one were to be called, although Labour and some Tory MPs indicated they were considering voting against any attempt to impose an early holiday.

A total of 48 MPs have to write letters to the party’s backbench 1922 committee calling for a confidence vote, which is normally organised a couple of days after it is called. May would need to win the support of more than half of the party’s 316 MPs to win it.

The critical amendment adopted by the government on Monday stated that HM Revenue & Customs could not collect duties or VAT on goods on behalf of the European Union unless there was a reciprocal arrangement. The Brexiters believed that would kill off the customs plan because they expect Brussels would reject such a measure.

On Monday morning, Downing Street indicated that it had concerns about this amendment and its impact on the customs plan. But there was a change of mind after Rees-Mogg held talks with the party’s chief whip, Julian Smith.

No 10 then argued that that EU had only ruled out collecting UK duties and tariffs at its border, and it would be necessary to have other reciprocal financial systems with the EU to refund businesses in the event that there were differing customs arrangements between Britain and the 27-country bloc.

The ERG believes May’s “facilitated customs arrangement”, which would see the UK collect EU tariffs on some imports, and plans for a “common rulebook” for goods and agriculture, would allow for too close a future relationship with the EU27.

The other three ERG amendments, including one making it illegal to establish a customs border in the Irish Sea, would harden what is already government policy into law and were not deemed by No 10 to be controversial.

David Davis, the former Brexit secretary, making his first Commons speech since he resigned from the government a week ago, said he disagreed with Soubry, who supports remaining in the EU customs union.

Speaking in favour of the UK having its own customs and trade arrangements, Davis said: “The European Union is a slow and not very effective negotiator of free trade agreements, we keep hearing about their negotiating power, their size. Actually the fact that they represent 28 different countries means they come up with sub-optimal outcomes all the time and actually we’re the country that does least well out of the EU free trade agreements.”

A separate soft Brexit amendment, calling for the UK to remain in the EU customs union, was withdrawn on Monday. It had not been expected to be carried because, while it had the support of Labour, the Scottish National party and the Liberal Democrats, only a couple of Tory MPs – Anna Soubry and Ken Clarke – had put their names to it.

Earlier in the day, before May’s concession became public, Scott Mann, the MP for North Cornwall,became the latest Tory MP to resign a junior government post over the Chequers deal in a rolling protest from concerned backbenchers. Mann, a parliamentary private secretary at the Treasury, said in his resignation letter: “Elements of the Brexit white paper will inevitably put me in direct conflict with the views expressed by a large section of my constituents.”

Labour sought to exploit the open Tory divisions. Peter Dowd, the shadow chief secretary to the Treasury, said: “It took two years for the prime minister to reach her Chequers deal, but only two days for it to fall apart. The government can’t get agreement with their own MPs, let alone with the European Union.”

Fears are growing at Westminster that there is now no Brexit deal – not the Chequers plan, nor David Davis’s Canada-style trade deal, nor a no-deal scenario – that could command the backing of a majority of MPs.